As oral argument nears in a case before the U.S. Supreme Court addressing whether payments made to generic drug makers who agree to delay entry into the market for a period of time in abrogation of their rights under the Hatch-Waxman Act and its amendments, a number of amici have filed briefs supporting the Federal Trade Commission’s position that such agreements are presumptively anti-competitive. FTC v. Watson Pharms., Inc., No. 12-416 (U.S., oral argument scheduled for March 25, 2013).

U.S. Rep. Henry Waxman (D-Calif.) argues in his brief that “judicial decisions shielding reverse-payment agreements between brand-name and generic drug manufacturers from stringent antitrust scrutiny stand as a significant obstacle to the fulfillment of the important public policies embodied in the Hatch-Waxman Amendments and their 2003 revisions.” He cites the significant savings to government and consumers if generic drug makers are not authorized “to exact a share of a brand-name drug owners’ monopoly profits in return for staying out of the market.”

Arguing on behalf of 36 states, the District of Columbia and Puerto Rico, New York Attorney General Eric Schneiderman also urges the Court to “adopt a presumption that pay-for-delay drug patent settlements are anticompetitive and unlawful.” In their brief, the attorneys general contend that they “have strong interests, both as pharmaceutical purchasers and as antitrust enforcers, in protecting fair competition in pharmaceutical markets.” In their view, “when a settlement agreement specifying an agreed entry date also includes a payment from the brand-name manufacturer to the potential generic competitor, that payment ordinarily represents an unlawful inducement to the generic to agree to delay entry into the market for a longer period than is warranted by the parties’ evaluation of the patent’s merits.”

A joint brief, filed on behalf of AARP, the American Medical Association, National Legislative Association for Prescription Drug Prices, and U.S. Public Interest Research Groups, claims that patients will skip doses of prescribed medicines due to their high cost, stating “Brand-name firms have used exclusion agreements to delay entry of generics by an average of seventeen months and to terminate patent challenges that would otherwise generate billions of dollars in consumer savings.” They claim that “the lack of low cost treatment options reverberates throughout the entire health care system,” especially when patients forego expensive prescriptions and require a higher cost of care over time as their untreated conditions worsen.

Some commentators have suggested that the U.S. Supreme Court will likely uphold the Eleventh Circuit and that it will be up to Congress to make the changes needed to fix the Hatch-Waxman Act flaws that have led to what amici consider to be less than optimal unforeseen consequences. See Politico, January 30, 2013.